In today’s competitive business landscape, so many small business owners operate on tight margins, and keeping an eagle eye on outgoings is imperative. In the day-to-day struggle of running a company, banking charges may easily be overlooked when it comes to breaking down your costs.

But as a business owner it is well worth shopping around for the accounts that can save you money, as this will be cash that you can spend in other areas of the business, or add to the bottom line.

This year saw the launch of fee-free basic bank accounts for millions of bank customers across Britain as nine major banks launched fee-free basic bank accounts.

But for those in search of a business bank account, the options may not look as attractive. Charges of £25 per transaction are possible on top of monthly account fees, and this can be a nightmare.

If you are a sole trader (not a limited company), then you may be able to use your normal bank account for your business, with all the better terms that involves (though check your terms and conditions – some banks won’t allow this). However, if you make a large number of transactions, deal with big sums, or need to regularly bank cash, then your bank may suggest getting a business account. If that’s likely, it’s important to start with the right one straight away.

The right banking choice for your business

The Co-operative Bank offers a unique banking package exclusively for FSB members, which is well worth checking out.

If you’re a member of FSB, you can switch to an account designed to do much more than meet all your day-to-day banking needs.

FSB Business Banking gives you a range of benefits that include no charges for everyday banking services, and free to pay in up to £2,000 cash per month. If you need to deposit more, you pay 75p per £100 extra, fee-free overdraft subject to application and status, and free to pay in cheques.

A business debit card also offers you a convenient way to pay for goods and services at home or overseas.

The account also provides access to a business charge card with no monthly fee subject to application and status. It offers an interest-free period of up to 38 days, making it easier to manage your expenses.

Additional benefits include a free change facility at Co-operative Bank branches (by arrangement) so you always have enough coins and notes, and an annual £25 loyalty bonus.

It is convenient to access, whether online, over the telephone, by post or by arrangement at your local Post Office.

Gary Jenkins, director of marketing company No Brainer uses an account with a charge-free period and says it was an important consideration for the company. He says, ‘We set up the company with zero funding and we watched out for everything with a cost associated with it as we needed to build up cash in the business in the early months.’

One of the key things Jenkins is considering is whether to switch after the charge-free period is over. ’Bearing in mind most of our clients have our existing details, we wonder if it’s actually worth doing that,’ he says.

Richa Bhalla of Pedals-Delivery.com also went for an account with the feature of a charge-free period. ‘At the time, two years ago, they were offering really good business rates and everyone I knew was going with them,’ she says. ‘No banking fees for a year was all I was concerned about and I focussed very little on what the charges would be once they did kick in.’

‘When you are a small business owner one year to 18 months seems sounds like a never-ending amount of time. I wish I had been more vigilant about the upcoming fees because by the time we got to that stage the switching costs were too high and I felt a little stuck.’

How to avoid charges

Once your charge-free period runs out, it’s important to think about how you operate to minimise such outgoings. Measures include making sure you’re paid by BACS rather than cheque, sticking to online banking, cutting down on the cash you pay into the account, using automated transactions where possible and avoiding using unauthorised overdrafts.

Also, you should make sure you check the charges in your statement, as this may also help you spot problems. For example, if you accept a cheque that’s been returned unpaid by the debtor’s bank, your bank will charge you an administration cost, and you won’t get the money due. So then you can chase the payment up, and ask them to pay the incurred charges too.

For more information on FSB Business Banking or any of the other business services, including advice, financial expertise and support, offered by FSB, please visit www.fsb.org.uk or call 0808 20 20 888 quoting SBAT1116 to discover more.

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